Memorandum of Conversation, by the Chief of the Division of the American Republics (Duggan)

[Participants:] The Secretary
Mr. Patrick Hurley

The Secretary gave me some notes that he made during a conference with Mr. Hurley. It would appear that Mr. Hurley explained the details of the proposed arrangement between the Mexican Government and the Sinclair Oil Company for compensation for the properties belonging to the company that were expropriated by the Mexican Government in March 1938. The company considered that its properties in Mexico were worth $13,890,000. In settlement it offered to take 20,000,000 barrels in oil. The Mexican Government agreed to settle on the basis of $9,000,000 in cash, $3,000,000 to be paid annually for three years, plus 20 or 25 million barrels of oil to be sold to the company at 20 or 25 cents below the posted price.

Mr. Hurley explained that this arrangement would only be feasible provided it were possible to arrange for an increase in the amount of Mexican petroleum that can enter the United States at the reduced tariff. At the present time Mexico’s share is around 2,000,000 barrels per year. Unless this were increased to 4,000,000 barrels per annum, which the Sinclair interests could use, the proposed arrangement would not be satisfactory to them.

Laurence Duggan